Hong Kong court orders liquidation of Evergrande

Evergrande Hong Kong

A Hong Kong court this Monday (01/29/2024) ordered the liquidation of troubled Chinese real estate giant Evergrande, after it failed to present a convincing plan for its restructuring.

“(Considering) the obvious lack of progress on the part of the company in presenting a viable restructuring proposal (…) I consider it appropriate for the court to issue a liquidation order against the company and so order,” said Judge Linda Chan of the High Court.

He recalled that, in a previous hearing, in December 2023, the court “made it very clear that it expected to see a viable proposal properly formulated.”

The company’s shares fell more than 20 percent on the Hong Kong stock exchange after the court decision and its stock trading was suspended.

“Trading in shares of (…) Evergrande Property Services Group has been interrupted at 10:19 (02:19 GMT) today,” the city exchange said. Also, it stopped the listing of the group’s electric vehicle subsidiary.

Evergrande, which was the largest real estate company in China, has reported debts of more than $300 billion, and its problems have become a symbol of the real estate crisis that the country has been experiencing for years. 

Evergrande “is solely responsible for the liquidation”

A creditor filed a liquidation request for Evergrande in 2023, but the case dragged on while the two parties tried to negotiate an agreement.

After the court session, a lawyer representing Evergrande’s creditors told reporters that the company “is solely responsible for the liquidation.”

China’s construction and real estate sector once represented a quarter of the country’s Gross Domestic Product (GDP).

However, President Xi Jinping considered the level of debt of Evergrande and other firms to be an unacceptable risk to the country’s economic well-being.

Since 2020, authorities have limited real estate companies’ access to credit, causing a wave of defaults.

As of the end of June 2023, Evergrande estimated its debts at $328 billion.

mg (afp, efe)